On Tuesday morning strike actions increased as services
delivered by local authorities were stopped. Garbage
collection was halted, parking tickets were not handed out,
municipal fee collections ceased, and kindergarten assistants
stayed home from work. Local authority workers are going on a
strike of unspecified duration. The workers are paralyzing
the main computer in every office.
The Histadrut is threatening to call a complete, general
strike over all of Israel if agreement is not reached. Talks
conducted on Monday ended with no decisions reached.
Employees in national government ministries and agencies did
not conduct office hours or answer telephones since Monday.
These include the tax authorities, the Land Registry, the
licensing authority, the Ministry of the Interior Population
Administration, the National Insurance Institute, and the
Israel National Employment Service (INES). Minister of
Finance Benjamin Netanyahu will meet the local administration
leaders to find ways to solve the crisis.
Among other things, passports cannot be issued or renewed,
and ID cards, birth certificates, and death certificates
cannot be issued. Driving examinations are not being
administered, and Department of Motor Vehicles offices are
providing no services.
The strike is a protest against parts of the economic plan
that are said to contravene the Histadrut collective work
agreements with the government. The government has threatened
to change various provisions unilaterally, through
legislation, despite the existence of signed contracts.
However Ministry of Finance director of wages Yuval
Rachlevsky warned the senior Ministry of Finance officials,
Minister of Finance Benjamin Netanyahu, and Minister without
portfolio Meir Sheetrit not to alter collective work
agreements through legislation. According to Globes
Rachlevsky said that such an attempt would lead to economic
unrest, strikes, and petitions to the High Court of
Justice.
Rachlevsky said that trying to use threats of legislation to
reach new collective work agreements with the Histadrut
(General Federation of Labor in Israel) could boomerang, and
prevent the parties from achieving the consensus essential to
the success of the plan.
Rachlevsky's view were only partially accepted. The eventual
cabinet decision said that an attempt would be made to reach
agreement with the Histadrut. Nonetheless, the threat of
unilateral measures and legislation was not withdrawn.
The Ministry of Finance said that officials at all ministry
levels had been consulted in the preparing of the plan, and
more than one opinion heard on every issue. The eventual
decision concerning wages gave priority to negotiations
between the Ministry of Finance and the Histadrut.
The Ministry of Finance will not be able to reduce its
borrowing in the near future, due to the need to finance the
large 2003 budget deficit.
The Government Debt Management Unit said that the government
would raise NIS 4 billion in marketable capital in April, and
NIS 5 billion in both May and June. The government raised NIS
6 billion in January, and NIS 5 billion in both February and
March. The government plans to raise a total of NIS 30
billion in the first half of 2003.
The Bank of Israel cautioned that external events and forces
beyond Israel's control have considerable impact on the
situation within Israel. "It will only be possible to fully
benefit from Israel's growth potential when the security-
political situation improves and there is significant
improvement in the West that is expressed in renewed demand
for output from the high-tech industry," said one of the
opening remarks in the central bank's 2002 annual report
which was released on Monday of this week.
Governor David Klein wrote that even if the Knesset passes
all of the treasury's austerity programs, the budget deficit
may reach or exceed 4 percent of GDP. Klein warned that
unless the austerity plan is adopted in full, the deficit
between 2004 to 2007 could climb to as much as 6 percent of
GDP.
Klein explained that the high level of public expenditure,
burgeoning public debt, and the heavy tax burden reflect
impaired credibility of budgetary policy, as evinced by high
yields on the bond market. The low credibility investors
attach to government deficit targets demands operative
changes in the deficit-reduction law, according to the
governor. The changes should tighten discipline to prevent
the government from constantly changing its deficit target,
as it did in 2002. Initially it was set at 1.5 percent, but
it was gradually raised by the government to 3.9 percent of
GDP.
The government hopes to pass the plan within the two weeks
that remain before Pesach. Netanyahu has worked vigorously
for the plan and so far managed to push it through the
Cabinet relatively quickly.
